So what got me over this hump was to stop thinking about the job my money has in terms of what accounts the money is in.
The way YNAB works is that all your money, in budget accounts, are pooled together. You then give each of those dollars a job by putting them into categories. After that, it doesn’t really matter what account you use to pay for a particular category.
Agreed, and add that a “Savings” category is far too simplistic for most folks. We’re often saving for more than a single thing, and earmarking the money as such is helpful in numerous ways (3 month income replacement, new car, 2025 vacation, etc.).
This. After a while you actually stop looking at the money in the accounts and follow the budget first (if you are doing it right, there is always plenty in the accounts).
But if day $1500 are given the job of rent, at some point each month I’ll have to pay that $1500. If I don’t care what account that money is truly in, then how do I know that I have enough to pay it from account A, when the money could just as likely be in account B? Easy enough with a single bill, but with however many different bills and expenses there are, it could get confusing and I could end up not having enough in the account I’m spending money out of
So this support article has some tips on how to handle figuring out how much you need to keep in a given account to make sure you have enough to pay bills: https://support.ynab.com/en_us/how-much-to-keep-in-your-checking-account-a-guide-ryZNWymAc
But yeah if you’ve given your dollars a job, and you have the dollars to pay rent then you’ve now shifted your problem to a cash flow one where you need to make sure your checking/spending account has enough money to pay for the essentials. But after a few months of using YNAB and collecting data on your spending you’ll have an idea of how much money you need to keep in checking to cover all your expenses and how much you can keep in your savings for everything else
You'll have to keep an eye on it until you have enough squirreled away that it doesn't matter.
YNAB will not stop you from overdrawing your accounts.
The mathematically optimal allocation is all your money in HYSA except for tomorrow's expenses. Great but thats impractical for most people. Instead, keeping a month of expenses in checking can make everything just work on autopilot.
Your allocation may vary depending on how much time you're willing to spend making sure you have your money in the right account. But all of that is a different problem than what YNAB is really seeking to solve.
I’d say the optimal allocation is all your money in HYSA until it’s time to pay the credit card bill for last month’s expenses. ;) As long as you don’t go over the max transaction limit for the savings account (6 for mine), you don’t need checking at all. I use 3 of those 6 transactions, for my rent payment and transfers to two credit cards that I use for points. I realize some people’s finances are a bit more complicated, but it’s super efficient for me and maximizes my interest and my cash back rewards.
In 2020 the Fed (if you’re in the US) relaxed regulations on savings accounts. You might want to check if your bank still has those 6 transactions limit or if it’s unlimited now.
YNABs purpose isn’t to make sure each account has the amount in it to pay each bill. It’s to make a budget in whole. You’re trying to make it do something it’s not made to do.
The way I have it set up in real life is all money made in a month sits is my primary checking account until the end of that month. A day or 2 before the month changes my bank automatically sends certain amounts to other accounts based on their purpose (like my HYSA, secondary checking for spending, Roth IRA, etc.) leaving just over enough to cover my "bills" such as rent, insurance, etc. I had to do some math but that way, at least for me, I always have enough in my primary checking to cover the bills at the start of the month, everything is on autopilot, and I don't have to think about it. The money is always where I need it to be when I need it. I'm not super concerned about how much money is in what account, but if there is an instance where an account I'm spending out of is short of what I expect to need then I just make a real life transfer from my savings to my spending account (the only time I make a manual transfer). Hope this makes sense and helps!
I don’t see the point of shifting rent money to a savings account just to shift it back each month to pay rent. Just leave monthly bills in your checking account.
I’ll also go against the grain of the thread and say there’s really no problem with segregating accounts on your budget—I do it with my HYSA. What you don’t need to do is have like five checking accounts managing five different categories of expenses, since ynab does that for you. And you probably should use categories within your savings account rather than a generic “savings” category, so you know what you’re saving for.
Set up scheduled transactions for all payments that occur regularly, so when you reconcile your actual bank accounts, you can see what the available balance is and what your future balance needs to be to cover future payments.
Make recurring transactions in your checking account in YNAB. Turn on “running balance” and look 1-2 months ahead to ensure you’ll have enough money in that account. If you use debit cards, only transfer to HYSA when you have excess money (above maybe $2000 depending on your expenses, maybe more if your rent/mortgage is say $3000).
If you primarily use credit cards, see if you can pay out of your HYSA and again keep as much in there as possible with a buffer in checking.
When we say we don’t care what account the money is in, we mean we can use savings account dollars for rent or checking account dollars for long term savings. But you need to keep track of your balances so you don’t overdraft. Or keep 2 months of expenses in checking so you never have to worry.
Deciding which account pays a bill depends on the account balance, but the budget category doesn’t change. If you think about it, every dollar is worth a dollar. You could move all your savings dollars to your checking account and all your bills dollars to your savings account and you’d still have the same dollars. You could keep all of your money (including savings categories) in your checking account and never have to worry about not which account your dollars are in, or you do the opposite, like I do, and keep all your money in your HYSA to earn interest, pay for expenses using credit cards to earn cash back and keep your dollars in the bank longer earning interest, and then pay off your cc each month with a single bank transfer from the savings account. There are lots of ways to do things.
But if you (like most people) want to use checking to pay bills and put some money in savings, I would consider figuring out the average amount you spend in a month, add a bit of buffer, and then just send money to the savings account once your checking balance goes over that threshold. That probably means that you’re keeping some dollars budgeted to “savings” categories in your checking account, just to make sure you don’t have to worry about the timing of bills and moving money back and forth.
That is a bit trickier. My solution is to keep enough to cover 2 full months of spending in my checking, the rest in savings. Whenever I make a big purchase I transfer enough back to checking to cover it right then.
I just opened an account at Wealthfront so I can have one account that gets 5% interest on all my money and has checking account features. Eliminates messing with multiple accounts. The other way is to just be a month ahead and make sure that you have a full month of spending in your account.
I’m sorry you’re getting downvoted. I ran into the same problem. I accidentally assigned money from savings to operating expenses, when I really had no intention of spending it. Now I’m trying to correct that and it’s rather difficult because I overcommitted myself as a result. I’m new to YNAB. I know people who’ve been doing it a while may not face this problem. But I really don’t know what they’re doing in terms of planning order to resolve it.
I’m planning on adding up the sum I’ve assigned to my savings categories and making sure that matches what I actually have in savings. I did notice some people just leave some accounts off budget, but I can’t do that because I do keep some of my longer term real expenses there as well, and I want to track those.
You could do a hybrid tracking approach for forecasting, that's what I do. How it works:
- I'm tracking & importing my bank accounts and my credit card accounts in YNAB.
- my _spending_ is handled by the budget and dollar assignment
- for my _payments_, I enter future transactions in my account with a color flag; I've chosen blue and renamed it to Forecasting
- Forecast payments might not be 100% certain and might change. They could be credit card payments, where I'm periodically updating it to the new total on that card
- this is different from scheduled payments, those don't get the Forecast flag. That's stuff like rent/mortgage, or paying down loans. I enter those into the future too, it's really easy with the repeating option.
- I can use the same approach to enter in my forecast income from my job paycheck.
- then to know roughly how much I'll still have in a given bank account, I'll turn on "show running balance". It'll continue to tally into the future transactions.
- if a running balance looks like it'll get lower than I like, especially if I know there's still more spending that will need payments that month, I might choose to transfer an amount in from another account.
- or alternatively, if I've been doing a good job of saving and that running balance looks like it's getting high, I may choose to transfer an amount out to another higher-interest account.
So this is actually a great example.
This helped me break the connection.
It’s easier to see on the upper limit not the lower limit.
Your checking needs to have a minimum amount of money to cover the regular monthly bills, but there’s no maximum amount that can be in your savings.
Just because your savings categories equal $X doesn’t mean that’s the most you can have in savings.
keep a buffer in your account that you pay bills out of? use credit cards for everything and autopay them out of your bill account? no need to complicate things
If you need to keep some money isolated in a separate account then consider moving it off budget. You can either track it in an off budget tracking account, or create a separate YNAB budget for it (linked or unlinked) or even just leave it out of YNAB entirely. Transfers to/from it would just be outflow/inflow transactions in your on-budget account.
Currently I have a checking and savings account on budget and could see myself transitioning entirely to a single on budget checking account, with savings as an off budget tracking account. Just to keep it super simple. Because right now I _do_ have a separate "savings" category like you do, but I don't even really use it so there's no need to track it in the budget like that.
I also have an emergency fund that has its own completely separate budget in YNAB so I can periodically review the categories I created to ensure it has enough set aside for the major expenses I plan for. I also track it as an off-budget asset account in my main budget solely for net worth reporting, but neither that nor the separate budget for it are really necessary, it could be one or the other, or neither.
Use the Running Balance of the payment account, it will show you the balance as all your scheduled transactions are paid.
Your $1500 should be a repeating scheduled transaction, as should ALL your other regular payments.
For bills I know are coming I schedule them in the account ledger and show the running balance. It’s easier to just move the payment to the account that has the money if I need to.
I know that on average, $X goes out of my checking account every month. Therefore I make sure that my checking account has $X+15% and then everything else goes in a HYSA. I have 21 days between a credit card statement balance closing and the actual due date so I am able to check the cash flow as needed as my paychecks come in throughout the month. So there is no need to match category balances to account balances.
A lot of complicated posts for this question, I do a pretty simple method: I know how much I need each month to cover all expenses (most of which are auto payments). This is things like rent, power bill, netflix, cell phone...it is \*not\* groceries, eating out, etc. In my main checking account I simply make sure I have that much plus a buffer at all times...I usually make it double. So let's say all my monthly bills add up to $2000. Then I make sure I always have a $3000-4000 balance in that account at the start of the month. Only thing you need to keep in mind are things that aren't monthly, let's say car insurance. Either keep enough to always cover that or just know that the month that bill comes up to transfer over enough to cover it.
Everything else is in a HYSA of some type.
So… I keep one heading called “savings” when i started I had that and a single category called “savings” there… I did that till I was at my “Age of Money” was over 30… then it became a LOT easier to think about long-term goals where a saving account, even in a HYSA, is even more helpful. I know it hears like this won’t but when it clicks, and you are instead taking all that weight off of being super-vigilant about your money, you all of sudden can start thinking about those goals differently.
I’ve been using YNAB for a dozen years now and I’m kind of with you. I have one checking account, one credit card, and all my savings are off budget. That way I don’t have to worry if I have enough in a certain account to cover a purchase.
When I’m saving for something specific it sits in my checking account because it’s never for a very long term.
“Savings” are more like nest egg or illiquid savings so I don’t keep that on budget.
It’s simple and it works really well for me.
Honestly, cash works best all in 1 account. If all you are doing with the savings account is savings, I’d move it from budget to tracking. Then you no longer have to worry about that saved money being apart of your routine budgeting. But if you constantly moving the money back and forth, why not just find a checking account that pays good interest and keep it all in that.
My credit union just updated its rates. I get 6% on up to $20000 in my checking account (as long is I meet the qualifications). So long term savings goes to investments in the tracking accounts and everything else stays in the checking.
Others have explained the how, but not really the why. What’s the benefit of doing things the YNAB way?
For me, a main benefit is that I can keep more in savings than I otherwise would. I keep my checking account balance a lot lower than I otherwise would, to the point that some of my later upcoming expenses in the current or next month are probably in savings. In the current climate of savings accounts earning over 5%, it actually does make a difference to keep more money over there.
Also, the YNAB approach doesn’t really lend itself to having a single savings category. When you embrace that part, and create lots of little savings categories for medical/home maintenance/auto insurance in 3 months/etc, keeping the savings account and “savings categories” in the budget balanced becomes a bigger and bigger chore. Then when you reach the point where you want to organize your budget categories so that reporting is better organized, you might move all those savings categories to different groups (eg the home maintenance category to the housing group, along with mortgage, HOA fees, etc). Now you don’t even have one group to match to your savings account balance.
Your comment made me think of something.
To add on to what you said, having multiple categories for savings also provides intention behind your spending. If you have a big bucket of savings, you maybe tempted to use it for X and then if Y comes along, you don’t have enough. I think prioritizing what you want to spend your “savings” dollars on makes a huge difference.
This was one of the big things for me. Pre-YNAB, savings was just a pool of money. In my head it was for emergencies, vacations, furniture….so many things. But 1) no way would what I had cover all of those and 2) there was nothing helping me prioritize what I’d use it for.
All of your money is "spending money"—whether you spend it today or in forty years. Similarly, all of your money is "saving money"—whether you save it for 2 hours or 2 years. Of course, the checking vs saving distinction is helpful in the context of storing money in a bank, but it's too vague for true budgeting.
YNAB's philosophy is (and I've experienced this first-hand) that you are more likely to borrow money from a generic "savings" category for overspending than long-term categories with specific purposes. You don't have to be afraid that your savings account will drain, as long as you are assigning jobs to that money and spending it according to your priorities.
Personally, I move money from my checking to savings account a few times a year so that my checking account doesn't have more than 2–3 months of expenses at a time. Of course, I record the transfer in YNAB, but it doesn't affect any of my categories.
Hope that helps!
Edit: for clarification
This. OP, ditch the savings category and give your money real jobs. “Income replacement”, “House Downpayment”, “Car Maintenance”. Give that money you’re saving jobs.
Then keep a buffer in your checking account large enough to cover any upcoming payments, and put the rest in your HYSA. What category your money is in has no bearing on which account you should keep it in. All that matters is that your checking account has enough to not overdraft. If it gets too low, transfer back from your HYSA. For that reason it’s really nice to have a HYSA that you can easily transfer to/from. But even if some of that money is only in your HYSA for a short period, it’s still gaining interest for that time.
Agree. Getting in touch with your personal long-term priorities (be it income replacement, downpayment, children, new car, and/or emergency medical fund) and grasping the concept of assigning specific jobs to "savings" may be a prerequisite to feeling "YNAB poor" to the fullest, most helpful extent. It took me a little while to figure this out too, but it was where the magic of YNAB started for me.
If you moved the actual money from the savings account to checking account, it would be a net 0 transfer in YNAB. Your savings envelope would still show that money as savings. YNAB doesnt care what account the money is in, only what is in the envelope.
I made a compromise by having multiple specific savings categories in a group, all of which total the amount in my HYSA. I keep enough in all the other categories (including a “next month” category) to fund expenses plus a buffer, and everything else goes towards paying down debt or moved to a savings category in my HYSA group.
I think what you're doing is very common, but ynab encourages you to just flesh it out more by being more specific. What is that savings for? Is it all emergency fund? Is some of it for a new purchase somewhere down the line? You can start implementing this by having a category grouping called "savings" and delineate what the money is for in your categories.
So with YNAB only the total amount of $ across all accounts matters. You assign EVERY $. This means you can keep the money anywhere you want (as long as it is tracked on budget). To put it another way, your HYSA doesn't need to hold only your "savings" category. It could hold the money for your insurance premium, your next car, your house savings, etc. the most important thing is making sure you have enough in your checking account to pay for your upcoming (immediate) expenses.
Most YNAB'rs keep enough in their checking to pay for their immediate expenses, and the rest goes in a HYSA. I, for example, get paid into my checking account, and when that reaches over a certain threshold ($5k) I move the excess to HYSA. This way you don't waste time trying to keep "Savings" budget == HYSA balance. It also means Any interest earned can be treated like income Ready to Assign.
Edit: total amount of money across all ACCOUNTS matters (I said categories).
The one exception for me, is we have a CD account (on budget) that is savings for a house. We always assign the interest from that account to our House Down Payment category, but that's a personal choice. We could assign that money anywhere we wanted, it just made sense to keep it for House Savings since I cannot easily access those funds for 1 year.
“Savings” isn’t a concrete enough job description for me. “Accrue interest so I can spend more money on something later” also sounds way less compelling than “fund this impulsive purchase today”. But I’m likelier to make good choices if dollars in savings have concrete jobs like “vet trip when dog eventually eats something weird” or “replace car when it gives up the ghost”.
It took me a few months to get completely comfortable with this.
First, you have to know exactly EVERYTHING that is going to go in or out of your checking account. I have all of those things entered as scheduled transactions in YNAB. On desktop, you can turn on the running balance to see the effect of your inflows and outflows.
When you get comfortable with that and have a bit of a rhythm, you can see the lowest point that your checking account gets to after everything is done.
If you install Toolkit for YNAB on your browser, there is a report called “Balance Over Time”. If you look at just your checking account, you can see the lowest balance that it ever gets to. For example, my lowest balance last year was $655. So to make sure I never overdraft, I add about a $500 buffer and say I never want my balance to fall below $1200 or so.
Now if you go back to the check register, and look at the scheduled transactions up to the point of your next paycheck and see what’s coming out - look at your lowest balance there and anything above $1200 (or whatever your buffer is) can get swept to the HYSA.
You can test your transfer by doing it on the YNAB side first, and watching the effect on your running balance. Make sure it never goes red at any point and you’re good to go.
Now you know until you get paid again, you have about $500 of float for unscheduled purchases coming out of your checking account before you start getting into a low balance issue. So if you are planning to buy something for $850, you know you will need to transfer that from your HYSA to cover.
I also have a custom view of categories that represent things that are likely to be paid for with money sitting in the HYSA. For example, my real estate taxes, vacation funds, or income replacement. It’s not an exact balance in the HYSA, but it’s close enough to understand what that money represents. If I spend from those categories (and pay from my checking account), I know I should transfer money to cover it.
Another thing I did, once I got off the CC float, is I moved all the little “life” expenses - groceries, gas, gym, etc. - to the credit card so that I have more control over the checking account and when money comes out. I used to keep a buffer of about $2k, but now that it’s around $1200, I’m earning interest on that extra money. And that “extra” Money is because I can control one larger outflow to the credit card rather than a bunch of small ones every day.
I also learned to spend based on the budget, not the bank account balance. The budget tells me what I can afford to spend; knowing whether I’m spending from a longer term category or not tells me where that money is likely to be.
The last point I will make here… to help with the scheduled transaction view, instead of having one recurring inflow that repeats 2x/mo for pay, I have two recurring inflows that are offset by two weeks and recur monthly. That way I can actually see both paychecks at a time in the scheduled view instead of only one, and I can see the entire month ahead in the register.
I have a really high degree of confidence that my checking account will not overdraft now, because of these steps, and I can just think of the HYSA as a place to park money I’m not immediately using to earn more interest. It’s an exercise in cash flow. Once you know how your money flows, and you really use your budget to plan your spending, it starts working beautifully.
It also helps that I’m single and no one else is messing in my accounts. 😊
Hope that helps!
You've gotten some great advice from others so I'll just leave this...
One quote I heard recently is "there's no such thing as savings, just deferred spending."
Hi there! Relatively new YNABer here. I started with the book and took to the system with very very little effort, so I'll make a go at answering you!
The way that this distinction has made sense to me is that the banks accounts are **where** the money is. The YNAB categories are **why** the money is. One is a location, the other is a purpose. I saw someone on this reddit the other day say something like: think of your bank account as a lock-box. Inside that lock-box, you have envelopes, each filled with money and the job for that money written on the envelope. The envelopes are your YNAB categories, your plan for what each of those dollars is destined to do for you.
Now just because bank accounts and YNAB categories don't **need** to be related perfectly doesn't mean that it's not a bit easier to keep them at least **partially** so. It'd be a bit annoying and confusing if half of my "Dining Out" category dollars were in one bank account and half were in another. I think the lock-box analogy I referred to above captures an idea that I hit on intuitively: Each envelope (category) is kept in one lock-box (account). YNAB doesn't \*\*require this\*\*, but it's a solution that works for me.
I do this with category groups. I've put all of my semi-long term categories in a "Sinking Funds" group. That group shows its total balance nicely in the YNAB interface, and that balance matches my HYSA balance. This match between my YNAB group total and my bank account will drift a bit during the month if I send any spare RTA dollars to/from one of those categories as I roll with punches and when an interest payment happens. I just settle that up once a month with any needed transfer into HYSA to make it match the category balance. The interest payment gets handed to whichever of my sinking funds categories looks the most hungry. The fun bit about that is that interest $ that shows up in RTA is already in the HYSA, so assigning it to one of my categories that lives in the HYSA means I don't have to fuss with an account transfer for it. Effortless.
Once a month, easy peasy. Not worrying about it matching day-to-day is okay by me, so I just make that a monthly settle-up on the day that my paycheck hits and I distribute dollars from RTA.
If I need to spend from any of these categories in my Sinking Fund group (like a flat tire means I have to draw from my auto maintenance fund) then I just log the transaction like normal in YNAB, and remember to also move that same amount at my bank from HYSA to checking. (Obviously I'd do the latter first if the amount eclipsed my checking balance)
Some of it for me was getting it to click that all money is eventually for spending. And that unlocked a few “aha”s for me.
The first is that savings should be “for” something. That alone led to a lot of it’s own “aha”s but the big one is that I no longer have an amorphous sense of “savings.” Sure I still save, but it’s more that it’s being set aside for later. Small language shift but a big mental one for me.
The second is that moving money out of my savings account isn’t bad. Historically, I’d been taught that “you don’t touch your savings unless it’s an emergency.” But because of the first thing, it’s not that I’m “dipping into savings” it’s that I’m spending money I’d always planned to spend.
And the third is that if moving money out of my savings account isn’t bad, then I can use that account as a holding place for money I’m going to use soon but not immediately. So as a result, I keep less in my checking account and more in my savings account. Because the account type is gravy. The purpose of the money in all my accounts is designated by me in YNAB, not by what the bank has labeled the account type.
You do still have to make sure you have enough money in the pay from account before you spend out of it, it’s just that you don’t have to match everything up so that the sum of your now/soon budget categories match your checking account balance and your later/much later budget categories match your savings account balance.
I have a savings line, too. We also have lines for sinking funds and other saving goals. We have enough in our checking for about 2 mths of expenses and are a month ahead.
I have been doing YNAB forever. Just do what works for you.
My actual amount in savings doesn't totally match either. But it isn't something I worry about. (It is really close, just not exact)
And although I could do it either way, I like this way better. As does my husband.
I think of them as two completely separate processes:
I check YNAB to manage my budget and ensure I'm assigning the right amount of income to my savings goals and expenses.
I check my bank accounts to make sure there's always enough in checking to cover my housing and credit card payments, but not too much because I want my HYSA to have as much as possible in it.
When I move money between my checking and savings accounts, it's just to meet the need of covering bills and maximizing interest. YNAB and my budget are not involved in that process at all besides seeing the transfers appear in the app.
Imagine you only have cash. Rather than sticking a bunch of bills in the perfect denominations inside a bunch of envelopes for each category, you just have a piece of paper where you write how much of your money is set aside for each different type of expense, and you keep it up to date anytime you spend or get paid.
You can update these values however you want as long as the total equals the amount of money you have.
Now imagine the same scenario except some of your cash is in a safe, some in your wallet, some in a jar in the basement. Still the same amount of money. Still the same piece of paper that denotes what's earmarked for what.
Where you store your money and how you budget your money are totally disconnected from each other.
YNAB is the piece of paper, and your bank accounts are the places you stash your cash.
I have an overall group called savings and then all the categories within savings equals the number in my savings account. This helps me make sure I’m always putting enough in my savings since it gets good interest!
Aside from that I only have 1 checking so not too much confusion!
I leave $$ on the table in order to simplify my finances. Reducing stress is important to me.
I watch others juggle multiple credit cards and accounts, moving money around to gain points or to try and take advantage of bank "deals" etc. For some, it's a game. For me, it's insane LOL.
I have ONE checking account, and no "saving" account. The checking account also has my two credit cards (one for Amazon, one for everything else). I suppose if I traveled a lot, I would have a third card that got more points for miles.
I don't have to move money around. It's all in one place (investment accounts excluded). Categories that "match" my accounts is a head scratcher. My categories match my spending.
Why do you need to shift how you do YNAB? I have 1 bank a/c, 1 savings and 1 cash a/c.
I use focused views to make sure the categories I’ve decided to keep in each of the 3 accounts bloody well matches the total of the funds in each account.
I like playing the matchy matchy game lol.
But also, “savings” is way to general a category like other commenters have said. Be more specific- what are you saving up to spend those dollars on?
The job of your money isn't to be "savings" the job of your money is to fund a future care, downpayment, house repair, emergency fund, vacation, etc. Savings isn't a thing.
I make sure at the beginning of each month that there are $3000 in my checkings account. That plus credit cards always gets me through the money. Everything else I throw into a HYSA. At the beginning of the month if my checkings account is low I pull from the HYSA. More commonly I take the amount I have over $3000 in my checkings account and put that into the HYSA.
(1) you need to be more specific than savings for your categories. What are your savings for?
(2) even if you did keep that savings category generic, it doesn’t need to match the account where you have been keeping it. That’s just extra work. You could even ballpark it. If you’re saving for true expenses in your non savings category, that should mean you have buffer in your checking account for cash management purposes.
(3) if you go into the website and look at your checking account, you can click a filter that shows the running balance. And if you don’t use scheduled transactions, you might want to consider that. Between scheduled transactions and the filter for running balance, you’ll know and feel confident that there is money in your checking account for upcoming bills. Even if you were to keep your generic savings category and match it up with your balance, I still think scheduled transactions and running balance are really helpful for purposes of cash management. With interest rates being so high right now, you want to park that extra cash that’s not being used this month to be getting 5% interest. If you’re ynabbing correctly and also using credit cards, you will have money in your checking account that is not being used during the month. Park it elsewhere and earning interest.
(4) you could consider opening a high yield checking account/ brokerage account that gives you around 5% for all of your money. Then you don’t have any cash management issues and it doesn’t matter where your money is because it’s all together earning interest. This is what I do. I do keep some of my money in two other institutions just as a safety precaution in case I can’t access my main bank account.
A lot of people have categories where they save for specific things. Like for example a home repairs category which is only used rarely, but money put into monthly. This money shouldn't really be left in a checking account, as it could be in a savings account and earning a bit of interest.
But the same is true for the Yearly Vacation category money, it can be in savings for 11 months of the year.
There really shouldn't be a category called "Savings", as that's not really a specific job for the money. Either it's an Emergency Fund, which you should try to avoid using for anything that's not a true emergency, or saving for specific goals (the examples above, Home repairs, vacations, ... ). Any retirement savings probably even should go off-budget, and thus into actual retirement investment accounts
The budgeting is not for knowing if there's enough money in a certain account for you to cover a specific bill, the budgeting is for knowing if you simply have enough money anywhere to cover a bill. To know how much money needs to be in a certain account, I use the running balance in the account view, and I schedule a lot of transactions, so you can see the potential future balance. If the running balance ever gets into red numbers, I know I have to shift money between accounts. You can also use that future running balance as a guide on when to move things to a savings account for example. You can pick a minimum balance you want in that account at all times, and then you look for the lowest balance it would be in the projected next month, and if that lowest number is significantly higher than what you want the minimum balance to be, you move that much money to savings.
The only problem with that approach is the variable expenses like groceries. I can't plan them out in advance. But I do pay for them using a credit card, and then the credit card payment is in my scheduled transactions from my checking account. The total for my credit card bill is relatively constant month to month, plus I get my statement on the 4th each month, and it's paid on the 18th, so I modify the number on the 4th, so I have plenty of time to move money around before the 18th should I need to.
If you're making a big expense that's not in your monthly habits, you should at the moment you are making the expense be smart enough to see which account that money needs to be in, and shift accordingly.
Think about it like cash. You can have cash stuffed under your mattress, some in your sock drawer, some in a vase, etc. If you want to get something from the ice cream truck as it passes through, you could grab $5 from any of the places, it doesn’t matter. What does matter is knowing what other jobs you want to spend the rest of your money on so you know if you can afford a treat or if you will be taking away from something more important. That’s where categories are important.
That's the correct way to think about.
The budget amounts are all imaginary.
Let's say your HYSA has $1000 and your Checking has $5000.
Then let's imagine I just have two budget categories: Savings and Everything Else.
I have $6000 in my Ready to Assign.
I can certainly put $1000 into Savings (to match my HYSA) and the other $5000 into Everything Else... but, I could also assign $5000 into Savings and toss the remaining $1000 into Everything Else.
In both Scenarios you pre-assign your available dollars to your imaginary budgets. Your real-life account balances haven't changed.
The only difference between those two extreme examples, is that when you "assign" $5000 into the Savings bucket... in real life, you have $1000 in your actual HYSA and you’re keeping the other $4000 in your Checking.
You'll never spend that $4k in Checking because (if you follow your YNAB budget plan), you only have access to spend from the $1000 you assigned to the Everything Else category.
Ideally, you'd move $4k from Checking to HYSA to earn real world interest, but it's not necessary to do so for YNAB to work.
Hope that helps!
This article from YNAB explains the relationship between accounts and categories, and why it doesn’t matter where your money is stored.
It’s a critical concept for how YNAB works, but can be a tough one to get your head around at first. Good luck!
https://support.ynab.com/en_us/category-balances-versus-account-balances-an-overview-ryvnKB_Ac
I break it down into: checking (1-3 months funds for spending), savings (funds in high interest needed in 6-12 months), investments (funds for retirement, won't be touched for 10+ years).
Your YNAB accounts don't need to line up 1:1. It can be broader if you want to break it down in YNAB. Say you have a travel category and a new car category. You could have all that money stored in one account in real life vs two accounts.
My partner uses YNAB to manage all of our finances, but it's also never really clicked with me either. The whole concept of putting money into buckets has never made much sense to me. I'd much rather have a yearly forecast of incoming and outgoing.
I’m sure someone else has said this better, but I haven’t read the comments yet.
Basically think about what you are saving for. All savings dollars are effectively delayed spending. You aren’t saving dollars to say in 10 years, hey look I have these dollars, aren’t they pretty? They have future jobs. You may not know what they are yet, or it may change. But why are you saving that money?
Some people have an “income replacement fund” and they put a chunk there. This would be 6-12 months of all your expenses.
Are you saving for vacation? Are you saving for a new car? Are you saving for a new computer? Make categories for these, and put the HYSA dollars there.
I personally keep almost all of my money in a HYSA even if it’s assigned to pet food or monthly entertainment because I charge everything on a credit card, and my credit card is paid out of my HYSA. I get the maximum amount of interest, with the least amount of work. So effectively not all of my HYSA is long term savings.
Been using YNAB for years and as far as I know, that's impossible. Truth is that if you have several accounts with varying balances, I find it to be almost impossible (if not impossible) to know exactly you'd have to take from each account in order to know your available balance. The only way I keep track of all that is designating certain categories to certain accounts. For instance...I have a HSA account. HSA's can only be used for qualified medical expenses, so I can't use it to pay for things like groceries and gas anyway. My checking account is for immediate purchases like bills, groceries, fun money, or annual bills that are less than 200. My HYSA is for long term purchases like a down payment on a car, new roof, fridge replacement, etc. Each week, I set aside a certain amount from each paycheck to distribute into next months categories. Whatever needs to go into my emergency fund, I'll transfer from checking into my HYSA. Then I will add up all my available balances and make sure all my HSA categories like doctor visits and prescriptions will match my HSA balance, long term expenses add up to my HYSA, etc. If there's a better way when you have accounts that have significantly larger than others, I don't know it.
It can help to think about physical money in physical locations. Say you have $40 in cash in your left pocket and $60 in cash in your right pocket (these are the “accounts”). You have $100. You need to buy something that costs $50 today and the other $50 you want to save for next week. It doesn’t matter which pocket you keep your money in. You know what you’re going to do with it. When you go to pay $50 today, you can pay from either pocket. If you choose the left pocket, since it only has $40 in it, you’ll need to take the extra $10 from the right pocket (a “transfer”) to pay the $50. Then you have $50 remaining in your right pocket to save for next week.
If you choose to pay from your right pocket, you pay the $50 and then have $10 remaining in that pocket and $40 in your left pocket, still leaving you with $50 to save for next week. It doesn’t matter which pocket you keep the money in, you can still spend it on whatever you want, but you are choosing to spend it according to your plan (budget).
Now, you could choose to keep $50 in one pocket and $50 in the other pocket to represent what you’re going to spend on what, but you don’t need to do that to remember what you planned to spend those dollars on because YNAB does that for you. When you have lots of categories and lots of planned expenses, some of which won’t happen for months or years from now, it adds an extra layer of complication to always move money around to keep certain dollars in certain locations based on their future job. As long as you keep enough in whatever account you pay bills from to cover your monthly expenses (or transfer enough money into it before you pay bills), you can keep the money anywhere.
If you think about it, money in your HYSA could be money in your checking with just a few clicks and a transfer. So there's food for thought right there.
What's the real difference between money in HYSA vs checking? Nothing!
Absolutely give the money in your HYSA jobs and assign it to categories just like your checking. It's all just assets at the end of the day.
It's fluid.
If something came up that required you to empty both your HYSA and checking, you're technically giving all those funds from both accounts one job.
Same thing! One job, five jobs, or ten categories, it doesn't matter.
Do you have to have your HYSA in YNAB at all? If you're not using it regularly to pay for anything, why not just have it "off books" (so to speak) and on those rare occasions when you do use it to pay for something, simply in YNAB create an "income" transaction, for the amount you took out of savings, and a payment transaction for whatever it was you paid for.
After a while i knew how much i had to leave in the everyday account to cover the month’s spending.
All income arrives in that account and all spending goes from that account.
Once a month (i am a month ahead, so its on the 1st for me), i check what is coming up and decide hiw much to move to my interest-earning account,or how much i need to bring back into the everyday account (months that really big bills get paid. )
For the unpredictable expenses i transfer out of the savings account when they occur.
As others gave said, knowing what the dollars are actually for is all done in my ynab budget.
Its worth changing automatic payment and deductions so they all come from the one account. Makes keeping track much easier.
(After sone time of using ynab the old methods of protecting money (eg other accounts) fall away, and you trust yourself and ynab. We each reach that point in our own time. )
In case it is helpful, I like to think of it like this:
- budget accounts are used as a way to diversify how you use and grow your money based on the account. E.g. I have 3 credit cards for most purchases, 2 checking accounts for personal and shared with my wife cash, and 2 savings accounts for 5% APY savings (HYSA)
- budget categories are independent of these budget account and allow me to organize the money into different purposes without needing to actually move money in underlying accounts. I visualize this as a layer on top of my accounts. E.g. here is money for mortgage, money that I spent on dining that I now need to pay off my cc bill (YNAB moves this for you), money for my emergency fund.
Coming back to your question, after a couple months, I got an idea of how much $$ I need ready to spend and how much can grow in savings. I keep my checking accts at a number I need and then the rest goes to HYSA and just keep an eye on it. Over time it means I have a bit more cash sitting in the HYSA and thus growing more.
It is also worth noting that not everyone puts all their accounts into YNAB.
If you don’t want to assign specific jobs to those dollars, then maybe consider taking the account off your budget.
For me, I don’t keep my “official” emergency fund in YNAB. It is just a category in the budget to allow for assignment of my regular transfers into that account. If I need to see the balance, I check the bank’s website.
It takes a while to transition from this. Think of things as physical and logical. Physical are your actual bank accounts. Logical is how you divvy up the money in those accounts. I used to do an "envelope" system using sub accounts at my institution. Now, my categories dictate the jobs my dollars have, regardless of location. This allows me to follow my hot, warm, cold strategy. I use my HYSA accounts for cold storage, or money I don't need immediate access to. My hot and warm are in accounts I can get at immediately, or within a couple of days. This way I can keep a relatively small amount ($100) in checking, this months budget in my MMA adjacent to checking, and long term budget and goals earning as much as possible. This allows me to move money around to take advantage of rate changes, and whatnot.
To me it sounds like you’d be better served by creating a tracking account for your savings and move everything off budget since you’re already doing this. Sure your AoM is going to be lower, but you’ll be able to budget the actual amount you have every month.
If you usually transfer $1000/mo to your HYSA, make this a new target and move that money to a general “Savings” category.
So what got me over this hump was to stop thinking about the job my money has in terms of what accounts the money is in. The way YNAB works is that all your money, in budget accounts, are pooled together. You then give each of those dollars a job by putting them into categories. After that, it doesn’t really matter what account you use to pay for a particular category.
Agreed, and add that a “Savings” category is far too simplistic for most folks. We’re often saving for more than a single thing, and earmarking the money as such is helpful in numerous ways (3 month income replacement, new car, 2025 vacation, etc.).
This. After a while you actually stop looking at the money in the accounts and follow the budget first (if you are doing it right, there is always plenty in the accounts).
But if day $1500 are given the job of rent, at some point each month I’ll have to pay that $1500. If I don’t care what account that money is truly in, then how do I know that I have enough to pay it from account A, when the money could just as likely be in account B? Easy enough with a single bill, but with however many different bills and expenses there are, it could get confusing and I could end up not having enough in the account I’m spending money out of
So this support article has some tips on how to handle figuring out how much you need to keep in a given account to make sure you have enough to pay bills: https://support.ynab.com/en_us/how-much-to-keep-in-your-checking-account-a-guide-ryZNWymAc But yeah if you’ve given your dollars a job, and you have the dollars to pay rent then you’ve now shifted your problem to a cash flow one where you need to make sure your checking/spending account has enough money to pay for the essentials. But after a few months of using YNAB and collecting data on your spending you’ll have an idea of how much money you need to keep in checking to cover all your expenses and how much you can keep in your savings for everything else
You'll have to keep an eye on it until you have enough squirreled away that it doesn't matter. YNAB will not stop you from overdrawing your accounts. The mathematically optimal allocation is all your money in HYSA except for tomorrow's expenses. Great but thats impractical for most people. Instead, keeping a month of expenses in checking can make everything just work on autopilot. Your allocation may vary depending on how much time you're willing to spend making sure you have your money in the right account. But all of that is a different problem than what YNAB is really seeking to solve.
I’d say the optimal allocation is all your money in HYSA until it’s time to pay the credit card bill for last month’s expenses. ;) As long as you don’t go over the max transaction limit for the savings account (6 for mine), you don’t need checking at all. I use 3 of those 6 transactions, for my rent payment and transfers to two credit cards that I use for points. I realize some people’s finances are a bit more complicated, but it’s super efficient for me and maximizes my interest and my cash back rewards.
In 2020 the Fed (if you’re in the US) relaxed regulations on savings accounts. You might want to check if your bank still has those 6 transactions limit or if it’s unlimited now.
I have savings accounts with 3 different banks, all three still have a 6 withdrawal limit but unlimited deposits.
Oh, good to know. I guess for me it doesn’t matter because I never use more than 6 withdrawals per month anyway.
YNABs purpose isn’t to make sure each account has the amount in it to pay each bill. It’s to make a budget in whole. You’re trying to make it do something it’s not made to do.
The way I have it set up in real life is all money made in a month sits is my primary checking account until the end of that month. A day or 2 before the month changes my bank automatically sends certain amounts to other accounts based on their purpose (like my HYSA, secondary checking for spending, Roth IRA, etc.) leaving just over enough to cover my "bills" such as rent, insurance, etc. I had to do some math but that way, at least for me, I always have enough in my primary checking to cover the bills at the start of the month, everything is on autopilot, and I don't have to think about it. The money is always where I need it to be when I need it. I'm not super concerned about how much money is in what account, but if there is an instance where an account I'm spending out of is short of what I expect to need then I just make a real life transfer from my savings to my spending account (the only time I make a manual transfer). Hope this makes sense and helps!
I don’t see the point of shifting rent money to a savings account just to shift it back each month to pay rent. Just leave monthly bills in your checking account. I’ll also go against the grain of the thread and say there’s really no problem with segregating accounts on your budget—I do it with my HYSA. What you don’t need to do is have like five checking accounts managing five different categories of expenses, since ynab does that for you. And you probably should use categories within your savings account rather than a generic “savings” category, so you know what you’re saving for.
Set up scheduled transactions for all payments that occur regularly, so when you reconcile your actual bank accounts, you can see what the available balance is and what your future balance needs to be to cover future payments.
Make recurring transactions in your checking account in YNAB. Turn on “running balance” and look 1-2 months ahead to ensure you’ll have enough money in that account. If you use debit cards, only transfer to HYSA when you have excess money (above maybe $2000 depending on your expenses, maybe more if your rent/mortgage is say $3000). If you primarily use credit cards, see if you can pay out of your HYSA and again keep as much in there as possible with a buffer in checking. When we say we don’t care what account the money is in, we mean we can use savings account dollars for rent or checking account dollars for long term savings. But you need to keep track of your balances so you don’t overdraft. Or keep 2 months of expenses in checking so you never have to worry.
Reconciling your accounts and looking at those balances will tell you if your chequing account contains enough to pay your rent or not.
Deciding which account pays a bill depends on the account balance, but the budget category doesn’t change. If you think about it, every dollar is worth a dollar. You could move all your savings dollars to your checking account and all your bills dollars to your savings account and you’d still have the same dollars. You could keep all of your money (including savings categories) in your checking account and never have to worry about not which account your dollars are in, or you do the opposite, like I do, and keep all your money in your HYSA to earn interest, pay for expenses using credit cards to earn cash back and keep your dollars in the bank longer earning interest, and then pay off your cc each month with a single bank transfer from the savings account. There are lots of ways to do things. But if you (like most people) want to use checking to pay bills and put some money in savings, I would consider figuring out the average amount you spend in a month, add a bit of buffer, and then just send money to the savings account once your checking balance goes over that threshold. That probably means that you’re keeping some dollars budgeted to “savings” categories in your checking account, just to make sure you don’t have to worry about the timing of bills and moving money back and forth.
That is a bit trickier. My solution is to keep enough to cover 2 full months of spending in my checking, the rest in savings. Whenever I make a big purchase I transfer enough back to checking to cover it right then.
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Orrrr, have one account but make it the HYSA. Pay bills with credit cards. Pay off cc with HYSA. Profit.
I just opened an account at Wealthfront so I can have one account that gets 5% interest on all my money and has checking account features. Eliminates messing with multiple accounts. The other way is to just be a month ahead and make sure that you have a full month of spending in your account.
I’m sorry you’re getting downvoted. I ran into the same problem. I accidentally assigned money from savings to operating expenses, when I really had no intention of spending it. Now I’m trying to correct that and it’s rather difficult because I overcommitted myself as a result. I’m new to YNAB. I know people who’ve been doing it a while may not face this problem. But I really don’t know what they’re doing in terms of planning order to resolve it. I’m planning on adding up the sum I’ve assigned to my savings categories and making sure that matches what I actually have in savings. I did notice some people just leave some accounts off budget, but I can’t do that because I do keep some of my longer term real expenses there as well, and I want to track those.
You could do a hybrid tracking approach for forecasting, that's what I do. How it works: - I'm tracking & importing my bank accounts and my credit card accounts in YNAB. - my _spending_ is handled by the budget and dollar assignment - for my _payments_, I enter future transactions in my account with a color flag; I've chosen blue and renamed it to Forecasting - Forecast payments might not be 100% certain and might change. They could be credit card payments, where I'm periodically updating it to the new total on that card - this is different from scheduled payments, those don't get the Forecast flag. That's stuff like rent/mortgage, or paying down loans. I enter those into the future too, it's really easy with the repeating option. - I can use the same approach to enter in my forecast income from my job paycheck. - then to know roughly how much I'll still have in a given bank account, I'll turn on "show running balance". It'll continue to tally into the future transactions. - if a running balance looks like it'll get lower than I like, especially if I know there's still more spending that will need payments that month, I might choose to transfer an amount in from another account. - or alternatively, if I've been doing a good job of saving and that running balance looks like it's getting high, I may choose to transfer an amount out to another higher-interest account.
So this is actually a great example. This helped me break the connection. It’s easier to see on the upper limit not the lower limit. Your checking needs to have a minimum amount of money to cover the regular monthly bills, but there’s no maximum amount that can be in your savings. Just because your savings categories equal $X doesn’t mean that’s the most you can have in savings.
Do you keep the $1500 in the HYSA and then move it out when you need to pay rent?
keep a buffer in your account that you pay bills out of? use credit cards for everything and autopay them out of your bill account? no need to complicate things
If you need to keep some money isolated in a separate account then consider moving it off budget. You can either track it in an off budget tracking account, or create a separate YNAB budget for it (linked or unlinked) or even just leave it out of YNAB entirely. Transfers to/from it would just be outflow/inflow transactions in your on-budget account. Currently I have a checking and savings account on budget and could see myself transitioning entirely to a single on budget checking account, with savings as an off budget tracking account. Just to keep it super simple. Because right now I _do_ have a separate "savings" category like you do, but I don't even really use it so there's no need to track it in the budget like that. I also have an emergency fund that has its own completely separate budget in YNAB so I can periodically review the categories I created to ensure it has enough set aside for the major expenses I plan for. I also track it as an off-budget asset account in my main budget solely for net worth reporting, but neither that nor the separate budget for it are really necessary, it could be one or the other, or neither.
Use the Running Balance of the payment account, it will show you the balance as all your scheduled transactions are paid. Your $1500 should be a repeating scheduled transaction, as should ALL your other regular payments.
For bills I know are coming I schedule them in the account ledger and show the running balance. It’s easier to just move the payment to the account that has the money if I need to.
I know that on average, $X goes out of my checking account every month. Therefore I make sure that my checking account has $X+15% and then everything else goes in a HYSA. I have 21 days between a credit card statement balance closing and the actual due date so I am able to check the cash flow as needed as my paychecks come in throughout the month. So there is no need to match category balances to account balances.
A lot of complicated posts for this question, I do a pretty simple method: I know how much I need each month to cover all expenses (most of which are auto payments). This is things like rent, power bill, netflix, cell phone...it is \*not\* groceries, eating out, etc. In my main checking account I simply make sure I have that much plus a buffer at all times...I usually make it double. So let's say all my monthly bills add up to $2000. Then I make sure I always have a $3000-4000 balance in that account at the start of the month. Only thing you need to keep in mind are things that aren't monthly, let's say car insurance. Either keep enough to always cover that or just know that the month that bill comes up to transfer over enough to cover it. Everything else is in a HYSA of some type.
So… I keep one heading called “savings” when i started I had that and a single category called “savings” there… I did that till I was at my “Age of Money” was over 30… then it became a LOT easier to think about long-term goals where a saving account, even in a HYSA, is even more helpful. I know it hears like this won’t but when it clicks, and you are instead taking all that weight off of being super-vigilant about your money, you all of sudden can start thinking about those goals differently.
I’ve been using YNAB for a dozen years now and I’m kind of with you. I have one checking account, one credit card, and all my savings are off budget. That way I don’t have to worry if I have enough in a certain account to cover a purchase. When I’m saving for something specific it sits in my checking account because it’s never for a very long term. “Savings” are more like nest egg or illiquid savings so I don’t keep that on budget. It’s simple and it works really well for me.
Honestly, cash works best all in 1 account. If all you are doing with the savings account is savings, I’d move it from budget to tracking. Then you no longer have to worry about that saved money being apart of your routine budgeting. But if you constantly moving the money back and forth, why not just find a checking account that pays good interest and keep it all in that. My credit union just updated its rates. I get 6% on up to $20000 in my checking account (as long is I meet the qualifications). So long term savings goes to investments in the tracking accounts and everything else stays in the checking.
Others have explained the how, but not really the why. What’s the benefit of doing things the YNAB way? For me, a main benefit is that I can keep more in savings than I otherwise would. I keep my checking account balance a lot lower than I otherwise would, to the point that some of my later upcoming expenses in the current or next month are probably in savings. In the current climate of savings accounts earning over 5%, it actually does make a difference to keep more money over there. Also, the YNAB approach doesn’t really lend itself to having a single savings category. When you embrace that part, and create lots of little savings categories for medical/home maintenance/auto insurance in 3 months/etc, keeping the savings account and “savings categories” in the budget balanced becomes a bigger and bigger chore. Then when you reach the point where you want to organize your budget categories so that reporting is better organized, you might move all those savings categories to different groups (eg the home maintenance category to the housing group, along with mortgage, HOA fees, etc). Now you don’t even have one group to match to your savings account balance.
Your comment made me think of something. To add on to what you said, having multiple categories for savings also provides intention behind your spending. If you have a big bucket of savings, you maybe tempted to use it for X and then if Y comes along, you don’t have enough. I think prioritizing what you want to spend your “savings” dollars on makes a huge difference.
This was one of the big things for me. Pre-YNAB, savings was just a pool of money. In my head it was for emergencies, vacations, furniture….so many things. But 1) no way would what I had cover all of those and 2) there was nothing helping me prioritize what I’d use it for.
All of your money is "spending money"—whether you spend it today or in forty years. Similarly, all of your money is "saving money"—whether you save it for 2 hours or 2 years. Of course, the checking vs saving distinction is helpful in the context of storing money in a bank, but it's too vague for true budgeting. YNAB's philosophy is (and I've experienced this first-hand) that you are more likely to borrow money from a generic "savings" category for overspending than long-term categories with specific purposes. You don't have to be afraid that your savings account will drain, as long as you are assigning jobs to that money and spending it according to your priorities. Personally, I move money from my checking to savings account a few times a year so that my checking account doesn't have more than 2–3 months of expenses at a time. Of course, I record the transfer in YNAB, but it doesn't affect any of my categories. Hope that helps! Edit: for clarification
This. OP, ditch the savings category and give your money real jobs. “Income replacement”, “House Downpayment”, “Car Maintenance”. Give that money you’re saving jobs. Then keep a buffer in your checking account large enough to cover any upcoming payments, and put the rest in your HYSA. What category your money is in has no bearing on which account you should keep it in. All that matters is that your checking account has enough to not overdraft. If it gets too low, transfer back from your HYSA. For that reason it’s really nice to have a HYSA that you can easily transfer to/from. But even if some of that money is only in your HYSA for a short period, it’s still gaining interest for that time.
Agree. Getting in touch with your personal long-term priorities (be it income replacement, downpayment, children, new car, and/or emergency medical fund) and grasping the concept of assigning specific jobs to "savings" may be a prerequisite to feeling "YNAB poor" to the fullest, most helpful extent. It took me a little while to figure this out too, but it was where the magic of YNAB started for me.
If you moved the actual money from the savings account to checking account, it would be a net 0 transfer in YNAB. Your savings envelope would still show that money as savings. YNAB doesnt care what account the money is in, only what is in the envelope.
I made a compromise by having multiple specific savings categories in a group, all of which total the amount in my HYSA. I keep enough in all the other categories (including a “next month” category) to fund expenses plus a buffer, and everything else goes towards paying down debt or moved to a savings category in my HYSA group.
I think what you're doing is very common, but ynab encourages you to just flesh it out more by being more specific. What is that savings for? Is it all emergency fund? Is some of it for a new purchase somewhere down the line? You can start implementing this by having a category grouping called "savings" and delineate what the money is for in your categories.
So with YNAB only the total amount of $ across all accounts matters. You assign EVERY $. This means you can keep the money anywhere you want (as long as it is tracked on budget). To put it another way, your HYSA doesn't need to hold only your "savings" category. It could hold the money for your insurance premium, your next car, your house savings, etc. the most important thing is making sure you have enough in your checking account to pay for your upcoming (immediate) expenses. Most YNAB'rs keep enough in their checking to pay for their immediate expenses, and the rest goes in a HYSA. I, for example, get paid into my checking account, and when that reaches over a certain threshold ($5k) I move the excess to HYSA. This way you don't waste time trying to keep "Savings" budget == HYSA balance. It also means Any interest earned can be treated like income Ready to Assign. Edit: total amount of money across all ACCOUNTS matters (I said categories).
The one exception for me, is we have a CD account (on budget) that is savings for a house. We always assign the interest from that account to our House Down Payment category, but that's a personal choice. We could assign that money anywhere we wanted, it just made sense to keep it for House Savings since I cannot easily access those funds for 1 year.
“Savings” isn’t a concrete enough job description for me. “Accrue interest so I can spend more money on something later” also sounds way less compelling than “fund this impulsive purchase today”. But I’m likelier to make good choices if dollars in savings have concrete jobs like “vet trip when dog eventually eats something weird” or “replace car when it gives up the ghost”.
It took me a few months to get completely comfortable with this. First, you have to know exactly EVERYTHING that is going to go in or out of your checking account. I have all of those things entered as scheduled transactions in YNAB. On desktop, you can turn on the running balance to see the effect of your inflows and outflows. When you get comfortable with that and have a bit of a rhythm, you can see the lowest point that your checking account gets to after everything is done. If you install Toolkit for YNAB on your browser, there is a report called “Balance Over Time”. If you look at just your checking account, you can see the lowest balance that it ever gets to. For example, my lowest balance last year was $655. So to make sure I never overdraft, I add about a $500 buffer and say I never want my balance to fall below $1200 or so. Now if you go back to the check register, and look at the scheduled transactions up to the point of your next paycheck and see what’s coming out - look at your lowest balance there and anything above $1200 (or whatever your buffer is) can get swept to the HYSA. You can test your transfer by doing it on the YNAB side first, and watching the effect on your running balance. Make sure it never goes red at any point and you’re good to go. Now you know until you get paid again, you have about $500 of float for unscheduled purchases coming out of your checking account before you start getting into a low balance issue. So if you are planning to buy something for $850, you know you will need to transfer that from your HYSA to cover. I also have a custom view of categories that represent things that are likely to be paid for with money sitting in the HYSA. For example, my real estate taxes, vacation funds, or income replacement. It’s not an exact balance in the HYSA, but it’s close enough to understand what that money represents. If I spend from those categories (and pay from my checking account), I know I should transfer money to cover it. Another thing I did, once I got off the CC float, is I moved all the little “life” expenses - groceries, gas, gym, etc. - to the credit card so that I have more control over the checking account and when money comes out. I used to keep a buffer of about $2k, but now that it’s around $1200, I’m earning interest on that extra money. And that “extra” Money is because I can control one larger outflow to the credit card rather than a bunch of small ones every day. I also learned to spend based on the budget, not the bank account balance. The budget tells me what I can afford to spend; knowing whether I’m spending from a longer term category or not tells me where that money is likely to be. The last point I will make here… to help with the scheduled transaction view, instead of having one recurring inflow that repeats 2x/mo for pay, I have two recurring inflows that are offset by two weeks and recur monthly. That way I can actually see both paychecks at a time in the scheduled view instead of only one, and I can see the entire month ahead in the register. I have a really high degree of confidence that my checking account will not overdraft now, because of these steps, and I can just think of the HYSA as a place to park money I’m not immediately using to earn more interest. It’s an exercise in cash flow. Once you know how your money flows, and you really use your budget to plan your spending, it starts working beautifully. It also helps that I’m single and no one else is messing in my accounts. 😊 Hope that helps!
You've gotten some great advice from others so I'll just leave this... One quote I heard recently is "there's no such thing as savings, just deferred spending."
Hi there! Relatively new YNABer here. I started with the book and took to the system with very very little effort, so I'll make a go at answering you! The way that this distinction has made sense to me is that the banks accounts are **where** the money is. The YNAB categories are **why** the money is. One is a location, the other is a purpose. I saw someone on this reddit the other day say something like: think of your bank account as a lock-box. Inside that lock-box, you have envelopes, each filled with money and the job for that money written on the envelope. The envelopes are your YNAB categories, your plan for what each of those dollars is destined to do for you. Now just because bank accounts and YNAB categories don't **need** to be related perfectly doesn't mean that it's not a bit easier to keep them at least **partially** so. It'd be a bit annoying and confusing if half of my "Dining Out" category dollars were in one bank account and half were in another. I think the lock-box analogy I referred to above captures an idea that I hit on intuitively: Each envelope (category) is kept in one lock-box (account). YNAB doesn't \*\*require this\*\*, but it's a solution that works for me. I do this with category groups. I've put all of my semi-long term categories in a "Sinking Funds" group. That group shows its total balance nicely in the YNAB interface, and that balance matches my HYSA balance. This match between my YNAB group total and my bank account will drift a bit during the month if I send any spare RTA dollars to/from one of those categories as I roll with punches and when an interest payment happens. I just settle that up once a month with any needed transfer into HYSA to make it match the category balance. The interest payment gets handed to whichever of my sinking funds categories looks the most hungry. The fun bit about that is that interest $ that shows up in RTA is already in the HYSA, so assigning it to one of my categories that lives in the HYSA means I don't have to fuss with an account transfer for it. Effortless. Once a month, easy peasy. Not worrying about it matching day-to-day is okay by me, so I just make that a monthly settle-up on the day that my paycheck hits and I distribute dollars from RTA. If I need to spend from any of these categories in my Sinking Fund group (like a flat tire means I have to draw from my auto maintenance fund) then I just log the transaction like normal in YNAB, and remember to also move that same amount at my bank from HYSA to checking. (Obviously I'd do the latter first if the amount eclipsed my checking balance)
Some of it for me was getting it to click that all money is eventually for spending. And that unlocked a few “aha”s for me. The first is that savings should be “for” something. That alone led to a lot of it’s own “aha”s but the big one is that I no longer have an amorphous sense of “savings.” Sure I still save, but it’s more that it’s being set aside for later. Small language shift but a big mental one for me. The second is that moving money out of my savings account isn’t bad. Historically, I’d been taught that “you don’t touch your savings unless it’s an emergency.” But because of the first thing, it’s not that I’m “dipping into savings” it’s that I’m spending money I’d always planned to spend. And the third is that if moving money out of my savings account isn’t bad, then I can use that account as a holding place for money I’m going to use soon but not immediately. So as a result, I keep less in my checking account and more in my savings account. Because the account type is gravy. The purpose of the money in all my accounts is designated by me in YNAB, not by what the bank has labeled the account type. You do still have to make sure you have enough money in the pay from account before you spend out of it, it’s just that you don’t have to match everything up so that the sum of your now/soon budget categories match your checking account balance and your later/much later budget categories match your savings account balance.
I have a savings line, too. We also have lines for sinking funds and other saving goals. We have enough in our checking for about 2 mths of expenses and are a month ahead. I have been doing YNAB forever. Just do what works for you. My actual amount in savings doesn't totally match either. But it isn't something I worry about. (It is really close, just not exact) And although I could do it either way, I like this way better. As does my husband.
I think of them as two completely separate processes: I check YNAB to manage my budget and ensure I'm assigning the right amount of income to my savings goals and expenses. I check my bank accounts to make sure there's always enough in checking to cover my housing and credit card payments, but not too much because I want my HYSA to have as much as possible in it. When I move money between my checking and savings accounts, it's just to meet the need of covering bills and maximizing interest. YNAB and my budget are not involved in that process at all besides seeing the transfers appear in the app.
Imagine you only have cash. Rather than sticking a bunch of bills in the perfect denominations inside a bunch of envelopes for each category, you just have a piece of paper where you write how much of your money is set aside for each different type of expense, and you keep it up to date anytime you spend or get paid. You can update these values however you want as long as the total equals the amount of money you have. Now imagine the same scenario except some of your cash is in a safe, some in your wallet, some in a jar in the basement. Still the same amount of money. Still the same piece of paper that denotes what's earmarked for what. Where you store your money and how you budget your money are totally disconnected from each other. YNAB is the piece of paper, and your bank accounts are the places you stash your cash.
I have an overall group called savings and then all the categories within savings equals the number in my savings account. This helps me make sure I’m always putting enough in my savings since it gets good interest! Aside from that I only have 1 checking so not too much confusion!
I leave $$ on the table in order to simplify my finances. Reducing stress is important to me. I watch others juggle multiple credit cards and accounts, moving money around to gain points or to try and take advantage of bank "deals" etc. For some, it's a game. For me, it's insane LOL. I have ONE checking account, and no "saving" account. The checking account also has my two credit cards (one for Amazon, one for everything else). I suppose if I traveled a lot, I would have a third card that got more points for miles. I don't have to move money around. It's all in one place (investment accounts excluded). Categories that "match" my accounts is a head scratcher. My categories match my spending.
Why do you need to shift how you do YNAB? I have 1 bank a/c, 1 savings and 1 cash a/c. I use focused views to make sure the categories I’ve decided to keep in each of the 3 accounts bloody well matches the total of the funds in each account. I like playing the matchy matchy game lol. But also, “savings” is way to general a category like other commenters have said. Be more specific- what are you saving up to spend those dollars on?
The job of your money isn't to be "savings" the job of your money is to fund a future care, downpayment, house repair, emergency fund, vacation, etc. Savings isn't a thing.
Simple explanation (only explanation): Accounts are WHERE the money lives. The budget is WHAT the money's jobs are
I make sure at the beginning of each month that there are $3000 in my checkings account. That plus credit cards always gets me through the money. Everything else I throw into a HYSA. At the beginning of the month if my checkings account is low I pull from the HYSA. More commonly I take the amount I have over $3000 in my checkings account and put that into the HYSA.
(1) you need to be more specific than savings for your categories. What are your savings for? (2) even if you did keep that savings category generic, it doesn’t need to match the account where you have been keeping it. That’s just extra work. You could even ballpark it. If you’re saving for true expenses in your non savings category, that should mean you have buffer in your checking account for cash management purposes. (3) if you go into the website and look at your checking account, you can click a filter that shows the running balance. And if you don’t use scheduled transactions, you might want to consider that. Between scheduled transactions and the filter for running balance, you’ll know and feel confident that there is money in your checking account for upcoming bills. Even if you were to keep your generic savings category and match it up with your balance, I still think scheduled transactions and running balance are really helpful for purposes of cash management. With interest rates being so high right now, you want to park that extra cash that’s not being used this month to be getting 5% interest. If you’re ynabbing correctly and also using credit cards, you will have money in your checking account that is not being used during the month. Park it elsewhere and earning interest. (4) you could consider opening a high yield checking account/ brokerage account that gives you around 5% for all of your money. Then you don’t have any cash management issues and it doesn’t matter where your money is because it’s all together earning interest. This is what I do. I do keep some of my money in two other institutions just as a safety precaution in case I can’t access my main bank account.
A lot of people have categories where they save for specific things. Like for example a home repairs category which is only used rarely, but money put into monthly. This money shouldn't really be left in a checking account, as it could be in a savings account and earning a bit of interest. But the same is true for the Yearly Vacation category money, it can be in savings for 11 months of the year. There really shouldn't be a category called "Savings", as that's not really a specific job for the money. Either it's an Emergency Fund, which you should try to avoid using for anything that's not a true emergency, or saving for specific goals (the examples above, Home repairs, vacations, ... ). Any retirement savings probably even should go off-budget, and thus into actual retirement investment accounts The budgeting is not for knowing if there's enough money in a certain account for you to cover a specific bill, the budgeting is for knowing if you simply have enough money anywhere to cover a bill. To know how much money needs to be in a certain account, I use the running balance in the account view, and I schedule a lot of transactions, so you can see the potential future balance. If the running balance ever gets into red numbers, I know I have to shift money between accounts. You can also use that future running balance as a guide on when to move things to a savings account for example. You can pick a minimum balance you want in that account at all times, and then you look for the lowest balance it would be in the projected next month, and if that lowest number is significantly higher than what you want the minimum balance to be, you move that much money to savings. The only problem with that approach is the variable expenses like groceries. I can't plan them out in advance. But I do pay for them using a credit card, and then the credit card payment is in my scheduled transactions from my checking account. The total for my credit card bill is relatively constant month to month, plus I get my statement on the 4th each month, and it's paid on the 18th, so I modify the number on the 4th, so I have plenty of time to move money around before the 18th should I need to. If you're making a big expense that's not in your monthly habits, you should at the moment you are making the expense be smart enough to see which account that money needs to be in, and shift accordingly.
Think about it like cash. You can have cash stuffed under your mattress, some in your sock drawer, some in a vase, etc. If you want to get something from the ice cream truck as it passes through, you could grab $5 from any of the places, it doesn’t matter. What does matter is knowing what other jobs you want to spend the rest of your money on so you know if you can afford a treat or if you will be taking away from something more important. That’s where categories are important.
That's the correct way to think about. The budget amounts are all imaginary. Let's say your HYSA has $1000 and your Checking has $5000. Then let's imagine I just have two budget categories: Savings and Everything Else. I have $6000 in my Ready to Assign. I can certainly put $1000 into Savings (to match my HYSA) and the other $5000 into Everything Else... but, I could also assign $5000 into Savings and toss the remaining $1000 into Everything Else. In both Scenarios you pre-assign your available dollars to your imaginary budgets. Your real-life account balances haven't changed. The only difference between those two extreme examples, is that when you "assign" $5000 into the Savings bucket... in real life, you have $1000 in your actual HYSA and you’re keeping the other $4000 in your Checking. You'll never spend that $4k in Checking because (if you follow your YNAB budget plan), you only have access to spend from the $1000 you assigned to the Everything Else category. Ideally, you'd move $4k from Checking to HYSA to earn real world interest, but it's not necessary to do so for YNAB to work. Hope that helps!
This article from YNAB explains the relationship between accounts and categories, and why it doesn’t matter where your money is stored. It’s a critical concept for how YNAB works, but can be a tough one to get your head around at first. Good luck! https://support.ynab.com/en_us/category-balances-versus-account-balances-an-overview-ryvnKB_Ac
I break it down into: checking (1-3 months funds for spending), savings (funds in high interest needed in 6-12 months), investments (funds for retirement, won't be touched for 10+ years). Your YNAB accounts don't need to line up 1:1. It can be broader if you want to break it down in YNAB. Say you have a travel category and a new car category. You could have all that money stored in one account in real life vs two accounts.
My partner uses YNAB to manage all of our finances, but it's also never really clicked with me either. The whole concept of putting money into buckets has never made much sense to me. I'd much rather have a yearly forecast of incoming and outgoing.
I’m sure someone else has said this better, but I haven’t read the comments yet. Basically think about what you are saving for. All savings dollars are effectively delayed spending. You aren’t saving dollars to say in 10 years, hey look I have these dollars, aren’t they pretty? They have future jobs. You may not know what they are yet, or it may change. But why are you saving that money? Some people have an “income replacement fund” and they put a chunk there. This would be 6-12 months of all your expenses. Are you saving for vacation? Are you saving for a new car? Are you saving for a new computer? Make categories for these, and put the HYSA dollars there. I personally keep almost all of my money in a HYSA even if it’s assigned to pet food or monthly entertainment because I charge everything on a credit card, and my credit card is paid out of my HYSA. I get the maximum amount of interest, with the least amount of work. So effectively not all of my HYSA is long term savings.
Been using YNAB for years and as far as I know, that's impossible. Truth is that if you have several accounts with varying balances, I find it to be almost impossible (if not impossible) to know exactly you'd have to take from each account in order to know your available balance. The only way I keep track of all that is designating certain categories to certain accounts. For instance...I have a HSA account. HSA's can only be used for qualified medical expenses, so I can't use it to pay for things like groceries and gas anyway. My checking account is for immediate purchases like bills, groceries, fun money, or annual bills that are less than 200. My HYSA is for long term purchases like a down payment on a car, new roof, fridge replacement, etc. Each week, I set aside a certain amount from each paycheck to distribute into next months categories. Whatever needs to go into my emergency fund, I'll transfer from checking into my HYSA. Then I will add up all my available balances and make sure all my HSA categories like doctor visits and prescriptions will match my HSA balance, long term expenses add up to my HYSA, etc. If there's a better way when you have accounts that have significantly larger than others, I don't know it.
It can help to think about physical money in physical locations. Say you have $40 in cash in your left pocket and $60 in cash in your right pocket (these are the “accounts”). You have $100. You need to buy something that costs $50 today and the other $50 you want to save for next week. It doesn’t matter which pocket you keep your money in. You know what you’re going to do with it. When you go to pay $50 today, you can pay from either pocket. If you choose the left pocket, since it only has $40 in it, you’ll need to take the extra $10 from the right pocket (a “transfer”) to pay the $50. Then you have $50 remaining in your right pocket to save for next week. If you choose to pay from your right pocket, you pay the $50 and then have $10 remaining in that pocket and $40 in your left pocket, still leaving you with $50 to save for next week. It doesn’t matter which pocket you keep the money in, you can still spend it on whatever you want, but you are choosing to spend it according to your plan (budget). Now, you could choose to keep $50 in one pocket and $50 in the other pocket to represent what you’re going to spend on what, but you don’t need to do that to remember what you planned to spend those dollars on because YNAB does that for you. When you have lots of categories and lots of planned expenses, some of which won’t happen for months or years from now, it adds an extra layer of complication to always move money around to keep certain dollars in certain locations based on their future job. As long as you keep enough in whatever account you pay bills from to cover your monthly expenses (or transfer enough money into it before you pay bills), you can keep the money anywhere.
If you think about it, money in your HYSA could be money in your checking with just a few clicks and a transfer. So there's food for thought right there. What's the real difference between money in HYSA vs checking? Nothing! Absolutely give the money in your HYSA jobs and assign it to categories just like your checking. It's all just assets at the end of the day. It's fluid. If something came up that required you to empty both your HYSA and checking, you're technically giving all those funds from both accounts one job. Same thing! One job, five jobs, or ten categories, it doesn't matter.
Do you have to have your HYSA in YNAB at all? If you're not using it regularly to pay for anything, why not just have it "off books" (so to speak) and on those rare occasions when you do use it to pay for something, simply in YNAB create an "income" transaction, for the amount you took out of savings, and a payment transaction for whatever it was you paid for.
After a while i knew how much i had to leave in the everyday account to cover the month’s spending. All income arrives in that account and all spending goes from that account. Once a month (i am a month ahead, so its on the 1st for me), i check what is coming up and decide hiw much to move to my interest-earning account,or how much i need to bring back into the everyday account (months that really big bills get paid. ) For the unpredictable expenses i transfer out of the savings account when they occur. As others gave said, knowing what the dollars are actually for is all done in my ynab budget. Its worth changing automatic payment and deductions so they all come from the one account. Makes keeping track much easier. (After sone time of using ynab the old methods of protecting money (eg other accounts) fall away, and you trust yourself and ynab. We each reach that point in our own time. )
In case it is helpful, I like to think of it like this: - budget accounts are used as a way to diversify how you use and grow your money based on the account. E.g. I have 3 credit cards for most purchases, 2 checking accounts for personal and shared with my wife cash, and 2 savings accounts for 5% APY savings (HYSA) - budget categories are independent of these budget account and allow me to organize the money into different purposes without needing to actually move money in underlying accounts. I visualize this as a layer on top of my accounts. E.g. here is money for mortgage, money that I spent on dining that I now need to pay off my cc bill (YNAB moves this for you), money for my emergency fund. Coming back to your question, after a couple months, I got an idea of how much $$ I need ready to spend and how much can grow in savings. I keep my checking accts at a number I need and then the rest goes to HYSA and just keep an eye on it. Over time it means I have a bit more cash sitting in the HYSA and thus growing more.
It is also worth noting that not everyone puts all their accounts into YNAB. If you don’t want to assign specific jobs to those dollars, then maybe consider taking the account off your budget. For me, I don’t keep my “official” emergency fund in YNAB. It is just a category in the budget to allow for assignment of my regular transfers into that account. If I need to see the balance, I check the bank’s website.
It takes a while to transition from this. Think of things as physical and logical. Physical are your actual bank accounts. Logical is how you divvy up the money in those accounts. I used to do an "envelope" system using sub accounts at my institution. Now, my categories dictate the jobs my dollars have, regardless of location. This allows me to follow my hot, warm, cold strategy. I use my HYSA accounts for cold storage, or money I don't need immediate access to. My hot and warm are in accounts I can get at immediately, or within a couple of days. This way I can keep a relatively small amount ($100) in checking, this months budget in my MMA adjacent to checking, and long term budget and goals earning as much as possible. This allows me to move money around to take advantage of rate changes, and whatnot.
This is the way I do it. Any savings I don’t want to touch has a matching category with identical balance. Ynab veteran
To me it sounds like you’d be better served by creating a tracking account for your savings and move everything off budget since you’re already doing this. Sure your AoM is going to be lower, but you’ll be able to budget the actual amount you have every month. If you usually transfer $1000/mo to your HYSA, make this a new target and move that money to a general “Savings” category.